Imagine you are starting a new venture, or you need to build on an existing business. Ordinarily you would borrow money or use your own equity to accomplish this. However, there is now another option – Crowd-Funding. Crowd-Funding is the practice of funding a project or venture by raising small amounts of money from a large number of people. There are several Crowd-Funding sites on the Internet that you can access. The beauty of Crowd-Funding is that you rely on friends, family, your social media connections, the local community, and even the Crowd-Funding community at large to support your venture. It takes a little work, but can be well worth the effort.
Two very popular Crowd-Funding sites are Kickstarter and indiegogo. Each has its own set of rules on how to run a campaign. For example, with Kickstarter if you don’t reach your preset monetary funding goal, you don’t get funded at all. This is not the case with indiegogo. To set up a campaign, you generally need to create a video that clearly explains what your project is. Your project cannot be open-ended, such as “I’m starting a business and need money”. There must be a well-defined project goal, for example, “I need to purchase 2 refrigeration units for my restaurant”. Those who donate to your campaign receive rewards based on the amount of money they pledge. It’s up to you to decide what the rewards are for each level of pledge, and the rewards that you chose can make or break your campaign.
For Kickstarter, about 75% of submitted campaigns are accepted, and roughly 40% end up getting fully funded. To see a successful, local Kickstarter campaign in action, go to Kickstarter.com and type “Artisan’s Palate” in the Search box. You will see a campaign from local businesswoman Pia Maffei. She is opening a unique retail shop in the Hobby Lobby Center by Winchester and Ynez by the end of the quarter. She’ll be joining us as a contributing writer in April to share more about her business and her Kickstarter campaign.